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Refinancing and Title Insurance



A recent report from Time Magazine stated that there are more than 1.3 million Homeowners who could still save money refinancing their home. What is that process and what are the costs a Homeowner can expect in relation to title insurance?


When a homeowner refinances their home, they are paying off one loan and replacing it with a new loan. The process of getting the loan is the same as when the homeowner purchased the property (contacting a lender, filling out an application, providing key financial documents, etc.). Typically, this is done for the owner’s benefit by securing a better interest rate or better mortgage terms. A person who refinances is subject to most of the same requirements of their lender, including appraisals and loan origination costs, as well as title insurance for the lender and other miscellaneous closing costs (Parish filing fees, insurance policy renewals, etc.).


Even though a Homeowner purchased title insurance for a lender when they bought their home, they will still have to purchase a new title insurance policy, known as a Loan Policy, when refinancing. It is a requirement of nearly every lender that a Loan Policy be purchased to insure the lender from the risk of loss. A Loan Policy protects the lender for the amount of the loan and protects them against any losses or damage due to defects in title, such as encroachments, undisclosed heirs, forged documents, and liens. These policies last for the lifetime of the mortgage.


There is good news as to the cost of Loan Policy, though - if certain requirements are met, the Homeowner may be entitled to a discount of up to 40% off the premium of the Loan Policy. This reduced rate is known as a "reissue rate." If you are refinancing, please inquire with the title company as to the availability of a reissue rate.


If you have any questions regarding refinancing and title insurance, or need assistance with any real estate matters, please contact Johnston Burkhardt at (504)324-2141 or Johnston@qtsnola.com.

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